Everyone buying a home would like to know that they are getting good value for money. Buying a property that is good value for money is not easy but is achievable for those who are astute and are willing to be patient and remove as much emotion from the decision as possible.

The first important mindset shift is that buyers must not confuse value with price. “Just because you were able to negotiate a reduction in the asking price does not make it a bargain. The price likely was inflated to begin with, because there are many incentives favouring higher listing prices,” says Renier Kriek, Managing Director of Sentinel Homes.
​
True bargains have some distinguishing characteristics to look out for. 

This includes:

• Motivated sellers

Sellers who are amid life-changing circumstances such as divorce, have fallen behind on their mortgage payments or have tenants who they are unable to evict will be more likely accept a lower offer. Often, but not always, motivated sellers’ properties end up on auction. Bargain hunters may also visit dedicated online portals like MyRoof.co.za or find court notices for foreclosure or sheriff’s actions as a source for good value propositions.

• Fixer Uppers

The market tends to devalue properties by more than the cost it will require to fix them up. It is likely that a property with R200,000 worth of arrear maintenance will be in the market for R1 million, but once you have done all the maintenance the value of the property shoots up to R1.5 million. This means the value gained by the maintenance is often more than the cost of the maintenance itself.

• Large plots

The average size of plots has been decreasing over time. The trend in urban areas is to densify and this is encouraged by municipalities. In a city like Cape Town, it is now possible to build up to three dwellings on a single residential 1 zoned plot. One must always consider other issues such as rezoning and urban development rules and this may require consultation with a town-planning expert. If the size of the plot is larger than the average new development in the area, there is likely to be surplus value. Unless the property is marketed as a development opportunity, which likely signals that the price has already been inflated to account for the size aspect.

• Vacant properties

Generally, vacant houses and flats sell for less than the ones that are occupied. This is mainly because a small crack or a spot on a carpet is more visible, than properties that are inhabited.  If you are able to visualise the potential, it is a good buy. 

• Gentrification

This is where the character of an urban area is changed when, for instance, artists or young professionals start flocking to the area. More art galleries and coffee shops start opening. “This is a reliable indication that the area is gentrifying. If you move quick enough you will be able to find a bargain that will increase in value rather quickly compared to similarly priced properties in other areas,” says Kriek.

• Relative value

When entering the market, it is a good strategy to consider buying the smaller or cheaper property in a particular area. The barrier to entry for these properties is generally lower than for the rest of the area which means demand for them is higher. Higher demand translates into quicker price growth.

Home seekers on the lookout for a bargain must remain alive to illegal construction. “The risk associated with illegal building work is almost always not worth the discount on the price,” says Kriek. If there are any doubts about the structural integrity of a building, call in the professionals to do an inspection. The benefit of a qualified home inspector, especially to inexperienced buyers, cannot be overstated. Since kitchens and bathrooms are the most expensive parts of any residential properties carefully consider the conditions of these two areas.

More sage advice from Kriek is to avoid bargains close to open public spaces. These areas tend to devalue property if they are not well maintained by local authorities. 

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, rosa-mari@atthatpoint.co.za, 060 995 6277, www.atthatpoint.co.za 
For more information on Sentinel Homes please visit:
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A path to financial security is home ownership.  Since there is no rule saying your first property must be a home to live in, you have the freedom to buy the home you can afford as the best way of getting started.
 
Asset prices have escalated much faster than wage increases over the past 70 years and that trend is likely to continue. This simply means that homes are becoming less affordable, says Renier Kriek, MD of Sentinel Homes, a non-bank home loan provider.
 
“If the trend of decoupling asset and wage prices is going to continue the best bet is to get into the property market sooner rather than later. Particularly when there are so many bargains to be had.”
First time home buyers are progressively becoming older because of affordability. It has moved from around 30 to 32 years to around 38 to 40 years.
 
“You must get in earlier to buck this trend. If you wait until the time you can afford your dream home you may never be able to achieve that goal.”
 
It is now a buyer’s market. Kriek explains that South Africa is coming off from a high-inflation-high-interest-rate cycle. “Inflation has become a more manageable beast, and market watchers are starting to predict a decline in interest rates next year.”
 
Time the market
Unfortunately, very few people act until they see the first rate cut. By then the cat is out of the bag and the market will change quite rapidly. “If you want to time the market you have to buy now.”
 
Kriek says first time buyers who can afford to acquire a real estate asset at current interest rates will likely be able to afford it through the cycle; and they are unlikely to purchase a property they can’t afford. “The ugly duckling may be a better start than the shiny house on the hill.”
 
He also suggests that prospective buyers use a bond originator to get prequalification for a home loan. “It shows that you are a serious purchaser, which makes everyone so much more willing and able to help.”
 
Real estate, whether it is your own home or an investment property, comes with expenses and tax consequences. However, if you do not want to live from wage-to-wage for the rest of your life then some sacrifices are called for to enter the property market.
 
“Every goal has some sacrifices and the sacrifices for financial goals are of the living standard kind. If you want to truly benefit from asset ownership you will have to suffer some short term discomfort. That is reality.”
 
Take the leap
Owning inflation-beating assets, like residential real estate in the correct areas and markets, is generally a good idea. Kriek has 19 years of property investment experience.
 
His advice: 

• Save for a deposit; it gives you leverage to negotiate a lower interest rate.
• Research; look at tenant vacancy rates and payment behaviours in different areas.
• Be astute, notice and make use of financial opportunities.
• Don’t get too bogged down in the preparations;  at some point you must take the leap and buy.
• Don’t underestimate the power of leverage. That is using other people’s money to ramp up your investment returns. Residential property is the safest way to use leverage to create wealth.
• The magic of compounding means the sooner you start the better.

​ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, rosa-mari@atthatpoint.co.za, 060 995 6277, www.atthatpoint.co.za 
 
For more information on Sentinel Homes please visit:
Website: www.sentinelhomes.co.za
Facebook: Sentinel Homes

Overregulation of the housing market in South Africa is discouraging the private sector from investing in formal low-cost housing projects.
 
This is according to Renier Kriek, Managing Director at Sentinel Homes. "With government resources being limited and corruption widespread, it is imperative that private capital is enticed to join the constitutional project of granting all South Africans access to adequate housing," he says.
 
It is apparent that, for all the government's initiatives, programmes and subsidies to provide RDP housing, a vast number of underprivileged citizens still reside in informal settlements.
 
However, while tax breaks exist for new or improved rental housing, with added incentives for low-cost housing, the rest of the legal and policy landscape is much less persuasive to investors.
 
Mortgage risk
For one, housing consumers who earn less than R15,000.00 per month make up less than 0.6 percent in value and 1.7 percent in number of accounts granted mortgages in Q1 2023, matching a decade long trend. This is because banks tend to avoid these riskier applicants, even when supported by the government's Finance-Linked Subsidy Programme (FLISP).
 
The reason is simple: the excessively long and inefficient foreclosure process in South Africa seems bent on ensuring losses for both banks and defaulting consumers.
 
In addition, judges are often overly sympathetic to defaulting debtors per case, not considering the overall negative effect this has on banks' attitude towards financing the larger underprivileged community.
 
"However, if the cost of terminating defaulting mortgages were low, banks would be less risk averse, thereby increasing the likelihood of access by this segment," says Kriek.
 
Rental risk
Similar to mortgages, the time and financial costs of eviction are too high, and the law and courts too lenient on defaulting renters.
 
With the supply of formal housing being so low, the cost of eviction should also be low and the rights of a large number of potential tenants should weigh more heavily than those of a few non-paying tenants.
 
"If the risk was low, more landlords would emerge to invest in satisfying the obvious demand for affordable accommodation," says Kriek.
 
Development rules
Lastly, housing development in South Africa is inhibited by long or delayed regulatory processes, as well as building standards designed around first-world circumstances. This is further exacerbated by municipal inefficiency, which affects delivery of essential services like roads, water, power and sanitation.
 
Authorities have also suddenly become deeply concerned with the lack of affordable housing. Their response has been to request that developers include affordable housing units in new developments, even in areas not marked for such housing.
 
"While laudable at first glance, this does not increase the availability of affordable housing as beneficiaries will often flip the unit at market price to realise a profit," says Kriek.
 
The positive intent is therefore negated and leaves the market worse off.
 
Change Is Needed
Mortgage risk, rental risk and misguided development rules, taken together, disincentivise the development of low-cost housing in favour of larger, pricier units.
 
"Given the state of the country’s housing market, urgent legal reforms and business-friendly policies are needed to ensure all South Africans gain access to constitutionally mandated housing," says Kriek.
 
ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, rosa-mari@atthatpoint.co.za, 060 995 6277, www.atthatpoint.co.za 
 
For more information on Sentinel Homes please visit:
Website: www.sentinelhomes.co.za
Facebook: Sentinel Home

Homes farther out, and more reasonably priced. This is increasingly what South African property buyers are looking for. “There are multiple reasons contributing to this trend,” explains Renier Kriek, CEO of home financing company Sentinel Homes.  
 
"Rising interest rates and the resulting decline in transaction volume are significant factors.
The increased proportion of ‘motivated sellers,’ selling because they are in a rising costs squeeze, are now likely to stabilise price growth until the rate hiking cycle eases off or starts to reverse.” 
 
According to Kriek, the consequences of the Covid-19 pandemic are also still very visible. “Office vacancy rates have increased, resulting in consumers no longer being as motivated by office proximity when selecting homes. This means they can search for value in outlying areas. Many even semigrate to other parts of the country. We also expect to see a rising level of commercial to residential conversions in urban areas.
 
Semigration and its cousin convenience
Kriek names the current hottest markets and sites for real estate investment as the coastal regions from the West Coast to Cape Town and Mossel Bay.
 
“The Mother City remains very popular despite high prices and strained infrastructure,” he says. “This thanks to their loadshedding buffer due to the City’s generation projects and other electricity initiatives, as well as the city’s lifestyle benefits.”
 
He claims that the Garden Route and George Airport’s close proximity make this popular tourist destination just as convenient as Cape Town.
 
“But it must be highlighted that the affordability benefit there is quickly waning because this area has become a focus for immigrants from both inside and outside the Western Cape.”
 
Finally, the West Coast (north of Cape Town) is also seeing a rise in the real estate market, thanks to its charming tiny fishing villages and rural communities like Langebaan, St Helena Bay and Paternoster.
 
“Consumers who work from home are discovering the real value in pricing that was previously only influenced by variables connected to the regional fishing and farming industry. Due to external demand for property, it is now unbound. On the other hand, gentrification problems may result from this and increasingly poor access to housing for families in the bottom half of the income spectrum is a real threat.”
 
Kriek says those still buying property in the economic hub of Gauteng, are shying away from freehold properties, such as single houses on larger plots in unguarded neighborhoods. “They prefer estates and sectional schemes. This is likely a search for safety and services,” he elaborates.
 
 Those entering the Gauteng property market will likely find the best long-term investment to be inside a security estate or secured sectional title scheme. Owners of freehold properties in more traditional suburbs may consider cashing out and moving with the trend in the interest of their longer-term financial well-being.”
 
Challenges for First Time Buyers
Kriek says that first-time buyers - who make up a very large proportion of purchasers - are moving into the property market much later. This trend is continuing to intensify.
 
The lack of affordable housing supply and inefficient housing finance market in the affordable or gap housing market, specifically properties priced under R750 000, contributes significantly to this trend.
 
“The National government, through the Department of Human Settlements, unveiled significant updates to their Finance Linked Individual Subsidy Programme (FLISP), now called First Home Finance, with the aim to improve access to affordable and gap housing. The expanded policy is still in the nascent stage of implementation, however, and its effects are likely not to be evident in market trends until next year.”
 
Kriek adds that Sentinel Homes offers the first open-market alternative to mortgages. By expanding access to housing finance, it is serving those 5%-10% of housing consumers who lack housing finance, despite being creditworthy and having the necessary disposable income.
 
“Now is the time in the property market cycle to escape the rent trap and start meaningful steps toward long-term financial health. Homeownership is a significant part of that equation,” says Kriek.
 
“You are more likely to buy something you can really afford if you buy it in the current conditions. There is the added upside that prices for properties priced around the average can only really go one way from here – and that is up!”

ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, rosa-mari@atthatpoint.co.za, 060 995 6277, www.atthatpoint.co.za 
 
For more information on Sentinel Homes please visit:
Website: www.sentinelhomes.co.za
Facebook: Sentinel Homes

While some people have emigrated to other countries to escape South Africa's apparent socio-economic decline, those who opt to stay may simply ‘semigrate’ to better provinces or areas.
 
Gauteng, with Johannesburg and Pretoria, remains the country’s economic powerhouse. Despite being the smallest province, it hosts almost 1 in 4 South Africans. It also contributes more than a third of GDP (Stats SA 2017) and more than 40% of consumer credit is granted within its borders (National Credit Regulator Q4 2022).
 
However, there has long been a trend of South Africans seeking out perceived lifestyle advantages by moving to other provinces. “KZN and, most notably, the Western Cape are favoured semigration destinations,” says national property trends expert and co-founder of Sentinel Homes, Renier Kriek.
 
Increased semigration
Before Covid-19, semigration often took one of two forms.
 
Firstly, whole businesses or business units would relocate to the Western Cape or KZN with their employees in tow. This practice continues as businesses seek better service delivery, such as the City of Cape Town’s ability to shield its residents and businesses from some of the effects of load shedding.
 
The second form was people who quit their jobs and accepted a pay cut to enjoy the so-called ‘lifestyle dividend’ of living closer to the shore or in rural areas, or decided to move their families and commute to Gauteng by plane, to arrive at the same result.
 
After Covid-19, which normalised remote working, a third variant of the semigration trend arose. Remote workers can now work from almost anywhere.
 
“This new development has led to increased semigration to outlying or previously less favoured areas, such as small coastal towns, where whole businesses and single job-seekers would rarely have ventured,” says Kriek.
 
These include West Coast towns such as Langebaan, St Helena Bay and Paternoster. The sleepy fishing village of St Helena Bay, for example, has 23 real estate agencies at last count, each with a number of agents selling and renting out property. The market for real estate there is booming.
 
Factors driving people to such destinations include the desire to escape higher levels of load shedding and crime, improved service delivery, a more relaxed social environment, and promising economic growth, job creation and infrastructure development.
 
In-demand areas
For lower income consumers, the Western Cape is attractive due to its lower unemployment rate (21.6% vs 32.9% nationally). The province is also reducing unemployment faster than other parts of the country.
 
In addition, it has an advantage in infrastructure, such as schools and hospitals, which are perceived to be superior.
 
Between February 2022 and February 2023, food prices in the Western Cape grew by 12.4%, which is much lower than Gauteng (14.2%).
 
“The semigration trend in the Western Cape is fairly broad-based whereas the northern coast is attracting more affluent earners from Gauteng,” says Kriek.
 
Similarly, unemployment in KZN (30.9%) and the Northern Cape (26.6%) is less than the national average.
 
Impact of semigration
While some areas are feeling the impact of semigration, others are witnessing economic growth as a result of this influx of new residents.
 
On the one hand, previously popular locations like the northern suburbs of Cape Town have become much busier due to semigration, with the roadways surrounding the city showing signs of being overburdened.
 
However, other favourite semigration destinations, like Mossel Bay, are enjoying beneficial growth and urbanisation. In Mossel Bay's case, this is due to its close proximity to George Airport, which makes commuting between Johannesburg and Cape Town's suburbs easy and convenient.
 
It is also highly probable that the flood of semigrants to these areas could drive housing prices up. This could be either to the benefit of locals selling their property or to their detriment if they wish to buy. In addition, existing homeowners could face higher-than-normal rates increases.
 
Prices in the Cape Town metro area have already far outpaced growth in the other urban centres. This factor, coupled with the inclination to seek greater value in times of rising interest rates, is driving buyers to hunt for property in outlying areas that could yield bigger bang for their buck.
 
“This trend is likely to continue and may intensify as national service delivery and infrastructure maintenance seem to lag behind the Western Cape,” says Kriek.
 
Availability of property
The supply of property may be hampered by over regulation of new constructions while reducing the availability of affordable housing to lower income earners.
 
As demand outstrips supply, areas outside established urban and suburban districts will surely gain more attention from home seekers, and experience the same economic benefits and growth.
 
Kriek says that prospective semigrants should therefore take the plunge as soon as possible.
 
"There are other trends to consider apart from semigration when deciding where to live so it's important to plan carefully; in addition, interest rates are already peaking so, if you can afford it, you will likely be better off in the future as long as you act now," he says.
 
ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, rosa-mari@atthatpoint.co.za, 060 995 6277, www.atthatpoint.co.za 
 
For more information on Sentinel Homes please visit:
Website: www.sentinelhomes.co.za
Facebook: Sentinel Homes